Report Clears Crra, Enron

Judge Finds No Evidence State Laws Were Broken In Failed Deal

After nearly 18 months, a one-judge grand jury has found no evidence that state criminal laws were broken in the failed $220 million energy deal between the Connecticut Resources Recovery Authority and Enron Corp.

In a 15-page report unsealed Friday, Judge Patrick L. Carroll III ruled that in the limited scope of the grand jury investigation none of the evidence presented by the Chief State's Attorney's Office showed that any crimes ranging from larceny, bribery and receiving kickbacks occurred.

``If crimes were committed in connection with the failed Enron/CRRA transaction, it appears, at least from the evidence disclosed in this grand jury investigation, that such crimes were committed outside of the State of Connecticut by individuals who were not directly involved in the negotiation and execution of the so-called Enron/CRRA $220 million energy transaction,'' Carroll wrote.

The CRRA described the deal, finalized in 2001, as a long-term contract under which the authority would sell electricity generated at its Hartford trash-to-energy plant to Enron through 2012. As part of the complex deal, CRRA advanced $220 million to the Texas energy-trading firm and was to get a 7 percent return in the form of monthly payments of more than $2.2 million.

But only eight payments were made and the rest of the money was lost when Enron went bankrupt in December 2001.

Since then the complex deal has been the subject of investigations by the legislature, Attorney General Richard Blumenthal, who has called it an ``illegal loan,'' and to some extent by federal authorities who decided years ago not to pursue a grand jury.

Chief State's Attorney Christopher L. Morano in the spring of 2003 sought a grand jury to compel key figures from both CRRA and Enron to produce documents and submit to questioning under oath about the inner workings of the deal.

Morano said Friday he was still reviewing the judge's report and didn't want to comment on it.

There were 63 witnesses called before the grand jury, including then-Gov. John G. Rowland, who appeared before Carroll in a special session in Newington last January. Carroll conducted the rest of his investigation in the Danbury courthouse.

In his testimony, sources said, Rowland admitted he ``probably'' did talk personally with Enron Corp CEO Kenneth Lay in the fall of 2001 before the deal was approved. During that period, Enron made sizable donations to the Republican Governors Association, which Rowland headed at the time. When the deal originally collapsed, Rowland denied ever talking to Lay.

In his report, Carroll specifically points out Rowland had no role in the deal prior to its being approved by the CRRA board. He is the only person exonerated by name by Carroll, who was one of Rowland's first judicial appointments.

``This is pathetic, bordering on a whitewash,'' said state Democratic Party Chairman George Jepsen, who, as state Senate majority leader through 2002, investigated and blasted the Enron deal. ``You'd have to be a first-grader not to understand the reality of what went down here -- John Rowland, professing ignorance of his chief of staff's actions and denying he discussed the deal in a meeting with top Enron officials mere days before it was consummated. ... And a Rowland-appointed judge to shepherd the legal process.''

Three people asserted their Fifth Amendment right against self-incrimination when called before the grand juror, including Peter N. Ellef, Rowland's former top aide who is currently under a federal indictment on racketeering charges, and Linda Kowalski, a lobbyist for CRRA. Ellef was both Rowland's co-chief of staff and CRRA's board chairman when the deal was made. Both he and CRRA President Robert Wright resigned when the deal fell apart.

Ellef's lawyer, Hugh Keefe, declined comment Friday. Kowalski's lawyer, R. Bartley Halloran, said that his client wanted to testify but he insisted that she invoke her right against self-incrimination.

``It was completely my decision,'' Halloran said. ``Nobody who I ever represent, ever, will testify before a grand jury without immunity. Ever. My experience has been uniformly horrible when people go in there and testify. They're taking a horrible risk'' that another witness will have a ``slightly different recollection'' of events, he said, and then his client may face an unwarranted perjury charge.

Lay was not called as a witness after he indicated through counsel that he would also assert his Fifth Amendment rights. He was indicted in July 2004 by a federal grand jury in Houston investigating the collapse of Enron.

Carroll said the testimony of those who did appear was ``remarkably similar.''

``It disclosed the fact virtually all who were involved in the decision to enter into the Enron/CRRA transaction were satisfied that the transaction was a positive and beneficial one for CRRA,'' Carroll wrote.